BIP Spring 2025

Voices

Maximize young clients’ HSA potential Brokers must show millennials and Gen Z how to use these accounts for maximum financial impact. By Brian Hutchin

Historically, we have significantly underestimated the costs of living in retirement, particularly healthcare. This trend is begin ning to change, however, with younger generations exploring a range of retirement savings, in cluding health savings accounts. By the end of 2023, people in their 30s accounted for about 30% of HSAs, according to research from Devenir & the HSA Council. Additionally, the Employee Benefit Research Institute found that millennials and Gen Z represent 60% of all HSA investment accounts. Given these trends, brokers need to help members of these generations understand how HSAs work. How HSAs work Thoroughly explaining HSA account options will allow your clients to maximize use. Here are some quick facts to share: • An HSA is individually owned and tax-advantaged. • The money in HSAs can be used for qualified medical expenses at any time, including retirement. • The 2025 maximum contribu tion amount for individuals is $4,300, and $8,550 for families. • HSAs have a triple tax advan tage: tax-free deposits, earnings and withdrawals.

open one with an HSA provider. Their HSA is tied to them, so their account will stick with them throughout life, with unused funds rolling over each year.

Maximizing an HSA An HSA is one piece of an

overall financial portfolio. Saving early and investing intentionally with an HSA is a great asset for young account holders. Regular review of all active accounts, such as 401(k)s, student loans or other financial obligations, will help to ensure balance and diversity. In addition to maximizing contributions, be sure your clients understand what is considered a qualified medical expense for HSA dollars. If they use their HSA for a non-qualified expense, they’ll have to pay income tax and a penalty fee of 20% on the withdrawal. Some HSA-eligible expenses:

To open and contribute to an HSA, your client must: • Be enrolled in a high-deductible health plan. • Not be enrolled in any part of Medicare. • Not be claimed as a dependent on another’s taxes. • Not have other non-permissible health coverage, such as a medi cal plan other than an HDHP or a flexible spending account. During open enrollment, if employers do not offer an HSA, HDHP plan participants can still Brian Hutchin is executive vice president and director of UMB Healthcare Services. With over 25 years in the financial industry, he is responsible for strategy and management of the healthcare team and on the executive team of the Institutional Banking division.

TIP: You can find a full list of HSA-eligible medical expenses in the IRS Publication 502.

• Dental treatments • Prescription drugs • Vision expenses • Chiropractic fees • Eye surgery

As your clients’ financial goals change, so will their HSA use. An HSA is a lifetime account, and if your clients start maximizing its benefits at a younger age, it has even more time to grow and help meet their ever-changing needs.

20 bip magazine Spring 2025